LOS ANGELES, Calif. - The NBA has called off a hearing to oust embattled Los Angeles Clippers co-owner Donald Sterling in advance of a vote on a potentially record-breaking deal negotiated by his wife Shelly Sterling to sell the team to former Microsoft CEO Steve Ballmer for $2 billion.

Shelly Sterling negotiated the deal despite objections expressed through her estranged husband Donald Sterling's attorneys. She said in a statement late Thursday that she agreed to sell the team to Ballmer "under her authority as the sole trustee of The Sterling Family Trust, which owns the Clippers."

The NBA said in a statement Friday that the league, Shelly Sterling and The Sterling Family Trust had "resolved their dispute over the ownership of the Los Angeles Clippers."

"Under the agreement, the Clippers will be sold to Steve Ballmer, pending approval by the NBA Board of Governors, and the NBA will withdraw its pending charge to terminate the Sterlings' ownership of the team," it said.

But Donald Sterling is still fighting, filing suit in federal court against the NBA and Commissioner Adam Silver and asking for damages in excess of $1 billion.

The suit was filed Friday in U.S. District Court in Los Angeles. It alleges that the league violated Sterling's constitutional rights by relying on information from an "illegal" recording that publicized racist remarks he made to a girlfriend.

It also says the league committed a breach of contract by fining Sterling $2.5 million and violated antitrust laws by forcing a sale.

"Mr. Sterling's lawsuit is predictable, but entirely baseless," NBA general counsel Rick Buchanan said. "Among other infirmities, there was no "forced sale" of his team by the NBA - which means his antitrust and conversion claims are completely invalid. Since it was his wife Shelly Sterling, and not the NBA, that has entered into an agreement to sell the Clippers, Mr. Sterling is complaining about a set of facts that doesn't even exist."

The NBA had been prepared for a lawsuit, saying in its statement that "Mrs. Sterling and the Trust also agreed not to sue the NBA and to indemnify the NBA against lawsuits from others, including from Donald Sterling."

The ownership hearing had been scheduled for next Tuesday after the NBA charged Sterling with damaging the league with his racist comments that were recorded and released. A three-quarters vote of owners to support the charge would have terminated the Sterlings' ownership, and the league would have sold the team.

Shelly Sterling reached an agreement to sell the team on Thursday night.

Donald Sterling was stripped of his ability to act as a trustee of the family's fortunes, including the Clippers, after two neurologists determined he was suffering from dementia earlier this month, according to a person close to the Sterling family.

The individual, who is familiar with the trust and the medical evaluations but wasn't authorized to speak publicly, said Sterling was deemed "mentally incapacitated" according to the trust's conditions because he showed "an inability to conduct business affairs in a reasonable and normal manner."

Donald Sterling made voluntary visits to two prominent neurologists who conducted extensive tests, including brain scans, earlier this month, the person said. Though Donald Sterling is no longer a co-trustee of The Sterling Family Trust, he still retains his 50 per cent ownership and still receives proceeds from the sale, the individual said.

"There is specific language and there are protocols about what to do, and steps in order to get a sole trustee position and that's what took place in the last couple of days," the individual said.

Sterling can try to reinstate his trusteeship by appealing to the California Probate Court.

Donald Sterling's attorneys contend, however, that as a co-owner he must also give his consent for the deal to go through. They say he won't be giving it. His attorney, Bobby Samini, said "the assertion that Donald Sterling lacks mental capacity is absurd" and that he'll fight to not sell given the NBA's conduct.

But the league said the sale agreement is binding and is going ahead with the approval process for Ballmer.

Ballmer said in a statement that he is honoured to have his name submitted to the NBA for approval and thanked the league for working collaboratively with him throughout the process.

Shelly Sterling negotiated the sale after Donald Sterling's remarks came to light.

Silver banned Sterling for life and fined him $2.5 million, and said he would urge owners to force a sale, unless the Sterlings chose to sell first. And the price Ballmer paid was stunning.

"Obviously, I saw $2 billion. That gave me a reaction," said Miami Heat star LeBron James, who had been vocal in calling for both Sterlings to be out of the league. "That was a reaction for sure. But as far as everything else, I haven't quite dived into it. ... Any time a 'B' goes after a number, man, you already know that you're talking about some real money."

This is not Ballmer's first foray into potential NBA ownership. Ballmer and investor Chris Hansen headed a group that agreed to a deal to buy the Kings from the Maloof family in January 2013 with the intention of moving the team to Seattle, where the SuperSonics played until 2008.

But Sacramento Mayor Kevin Johnson lobbied the NBA for time to put together a bid to keep the team in California, and though the Ballmer-Hansen group later increased its offer, owners voted to deny the bid for relocation and the Kings were sold to Ranadive.

Johnson, who has been advising the NBA Players Association in the wake of Sterling's comments, praised Ballmer in a series of tweets Friday night.

"When the Clips play next season, players will be proud to wear the logo on their chest & fans will be proud to cheer for their hometown team," Johnson wrote.

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